5. Suppose the dollar interest rate and the pound sterling interest rate are the same, 5 percent...
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5. Suppose the dollar interest rate and the pound sterling interest rate are the same, 5 percent per year. What is the relation between the current equilibrium $/£ exchange rate and its expected future level? Suppose the expected future $/£ exchange rate,
$1.52 per pound, remains constant as Britain's interest rate rises to 10 percent per year. If the U.S. interest rate also remains constant, what is the new equilibrium $/£
exchange rate?
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Related Book For
International Economics Theory And Policy
ISBN: 9780321116399
6th Edition
Authors: Paul R. Krugman, Maurice Obstfeld, Marc Melitz
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